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Case Study Example

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It has three major subsidiaries of restaurants, Select Seafood, Italian Palace Restaurants and China Delight restaurant. Among these three subsidiaries the China delight restaurant faced unexpected downturn…
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Download file to see previous pages The business model followed by Hanon compelled the managers to follow all the rules laid down by the corporate office down to every word. Therefore, the corporate office had complete control over all the operational activities of the restaurant chain. Looking at the initial results of success, the higher management decided to expand the business of China Delight. After the expansion the problem started surfacing. As a result of the expansion, the management had to hire general managers from outside. This decision making eventually proved to be the root cause of the downfall of China Delight. The previously implemented model of close control by the corporate office started creating friction with the newly appointed managers. Moreover, they did not possess any experience to run chain restaurants, so they had to be trained in order to get them habituated with the business and operational structure of Hanon. The training did not prove to be fruitful for China delight, as the managers mostly ignored the instructions from the higher management and decided to run the operations based on their own knowledge and expertise.
This as a result led to severe deviations from the operations manual provided by the corporate office thereby reducing its control over the restaurant chain. The newly appointed managers who did not had any experience in running restaurant chains failed to maintain consistency and quality standards, which hampered the brand image of the restaurant chain thereby reducing the foot fall level. The decreasing revenue and severe loss making became a severe concern for the company. Moreover, there was a communicational gap between the general managers and the corporate office, as the managers did not file regular reports and mostly ignored the instructions from the higher management; this as a result worsened the problem even further. There was also a great ...Download file to see next pagesRead More
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